Tim Cook: Cheaper iPhone? Maybe...

Is a cheaper iPhone 5 necessary when the iPhone 4 is free on a contract? Is an entirely new product on the horizon, and it's not an iPhone? When Apple wants to introduce a more affordable product, it's not always exactly what we expect.

Apple may be planning a cheaper iPhone, if CEO Tim Cook's vague hints are anything to go by, but they're always planning something. While speaking at the Goldman Sachs Technology and Internet Conference Tuesday, Cook was asked how Apple wants to reach the markets looking for a more affordable handset. While he didn't answer directly, he said that Apple does look for ways to make products that budget-conscious consumers can buy.

First, Cook said that Apple doesn't just aim for cheap, by saying, "We wouldn't do anything that's not a great product." He added, "... for people who are more price sensitive, we've lowered the price of the iPhone 4 and iPhone 4S," saying that Apple was unable to meet the demand after the price cut.

October 19, 2011 — Apple CEO Tim Cook speaks to employees at a celebration of Steve Jobs' life. source: Apple

"If you look at Apple's history, the iPod started out costing $349. Now you can walk into a store and pick up a Shuffle for just $49," explained Cook. "For years, people asked, 'Why don't you have a Mac that's less than $500 or $1000?'" He concluded, "We created the iPad, which starts at $329."

It seems that Apple is exploring options for a more affordable communication device, but it may not be a cheaper-made iPhone. It's worth noting that the iPhone 4 is free with a two-year contract, and the iPhone 4S is $99 with the contract. It's unclear just what a budget iPhone would be, at least in the United States where phones are usually sold by carriers with a subsidy.

Meanwhile, in early January, it emerged that Apple is working on a lower-end iPhone. The company has apparently been working on such a handset "for years," says the Wall Street Journal. Plans for the device are moving along, and it could launch as soon as 2013. The report goes on to say that Apple could drop plans for the lower-priced iPhone, and it may never become a reality. To the Wall Street Journal's credit, they have been an accurate source of Apple rumors in the past. Other reports speculate that a lower-priced iPhone would be sold only in developing markets like India.

Another device rumored to be in the pipeline is a "watch-like device" with a curved glass design . Details are sparse, but Cook's recent comments did seem to imply that when Apple wants to introduce a more affordable product, it's not always exactly what we expect.

The safe bet would be to guess that Apple is working on both and simply exploring its options. Is a cheaper iPhone necessary when the iPhone 4 is free on a contract? Is an entirely new product on the horizon, and it's not an iPhone? Maybe, that's likely why Cook chose the words that he did.

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